MISS K PRESTON v JOHNSTON & JOHNSTON T/A TOM HENRY'S RESTAURANT [2000] UKEAT 389_99_2203

EMPLOYMENT APPEAL TRIBUNAL

BAILII case number: [2000] EAT 389_99_2203

Case No Appeal No. EAT/389/99

Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

Between

MISS K PRESTONAPPELLANT

JOHNSTON & JOHNSTON T/A TOM HENRY'S RESTAURANTRESPONDENT

Before

Mr Justice Burton Mr A E R Manners Mrs T A Marsland

Date 22 March 2000

[1]APPEARANCES For the Appellant MR A J MARRIOTT (Solicitor) Labour Lex Ltd Solicitors Office 2 Castle Park Frodsham Cheshire WA6 6UJ For the Respondents MISS C D'SOUZA (of Counsel) Instructed by: The Kennedy Partnership Solicitors 15 Railway Road Ormskirk Lancashire L39 2DW MR JUSTICE BURTON : This is an appeal by Karla Preston, as Appellant, against Tom Henry's Restaurant, which was a business run by Mr and Mrs Johnston. The Appellant brought a claim in the Employment Tribunal at Liverpool against the Respondent for unlawful sex discrimination and unfair dismissal arising out of the Respondents' dismissal of the Appellant when she was pregnant in the Summer of 1998.

[2]The conclusion of the Employment Tribunal, in favour of the Appellant, was that she had been dismissed because of her pregnancy and that she was unfairly dismissed in a manner which it regarded as reprehensible, and it adjourned the matter for a further hearing of remedy arising out of its findings.

[3]When it came to remedy, the sums the Tribunal awarded fell into two categories. The first category was for general damages by way of compensation and it awarded the sum of £2,000, and the second category related to what one might call special damages, financial compensation, which, apart from the basic award, it quantified as a net sum, after credit for monies received by the Appellant, of £765.

[4]There was then a further hearing before another Tribunal, with which we have not been concerned, relating to a claim by the Appellant for unauthorised deductions of wages contrary to the provisions of the Employment Rights Act 1996 , when a further financial award was made in favour of the Appellant.

[5]The Appellant's appeal before us, with leave, has rested upon three grounds. Mr Marriott, who argued the matter on behalf of the Appellant, would have wished, it seems almost by way of afterthought, to have a fourth ground, but it did not feature in his Notice of Appeal and, in any event, he did not have leave to run it, nor sought any kind of special leave from us, arising out of an imaginative argument that, because the Respondents had failed to complete the sex discrimination questionnaire, information was thus denied to the Appellant which might have enabled her to make some argument under the TUPE Regulations such as to raise the possible head of a claim for loss of a chance. This seemed to us to be outside any leave he had been given and, indeed, to be a wholly new point which could not possibly be properly run at this stage. But leaving that aside, the three grounds which were raised were dealt with before us.

[6]Although the financial point was dealt with first and at the greatest length, I shall leave that for a moment in order to dispose shortly of the two others, both of which related to the quantification of the £2,000 for injury to feelings.

[7]There were two bases which intertwined by way of challenge to that conclusion of the Tribunal. The first is that the sum of £2,000 is a sum which no reasonable Tribunal could have arrived at on the facts, effectively, that the decision of this Employment Tribunal was perverse. The second is that the Tribunal ought to have included an element for aggravated damages, so that that too would lead to a conclusion that the sum of £2,000 was too little.

[8]Mr Marriott's submissions were short and to the point, and we did not feel it necessary to call on Miss D'Souza for the Respondents before concluding that there was no substance to them.

[9]The submission was that the conduct of the Respondents, as found by the Tribunal in its first decision on liability, was such that its subsequent conclusion to award £2,000 must have been perverse. Mr Marriott took us to the initial decision in which, in paragraph 3 of that decision, the Tribunal set out five respects in which it regarded the Appellant as having been treated by the Respondents in an "abrupt and insensitive manner" . He also reminded us of the dismissal itself and the conclusions of the Tribunal in regard to that dismissal, which again was critical of the Respondents. He submitted that those findings of "insensitive" and "reprehensible" conduct, cannot have been taken fully into account when the Tribunal came to make its subsequent decision on compensation. Further, by reference to the same factors, he submitted that this was a case in which there ought to have been an element of aggravated damages.

[10]So far as the decision on remedy is concerned, the Tribunal, which was the same Tribunal which reconvened for the purposes of remedy as had heard the matter on liability, set out in paragraphs 4, 5 and 6, its conclusion, and they are as follows:

"4. In respect of the injury suffered by the applicant to her feelings, we took into account that she had been subjected to unpleasant treatment following the announcement of her pregnancy to the respondents. Illustrations of this treatment are contained in paragraph 3 of our initial Decision. However the applicant did confirm to us that she had not sought any medical treatment or counselling therapy prior to her actual dismissal on 16 June 1998. According to the applicant – and her evidence was not challenged – she undertook two or three counselling sessions between the date of her dismissal and the end of July 1998 and also sought advice from her doctor in relation to the stress from which she was suffering during that period. 5. We also took into account the extremely insensitive manner in which the applicant had been dismissed by the respondents as detailed in paragraph 7 of our initial Decision and accept that this caused the applicant additional and unnecessary distress. 6. Taking all of these factors into account we consider that an appropriate award of compensation for injury to the applicant's feelings in this case is £2,000."

The Tribunal went on to say at paragraph 8:

"8. We reject a submission on behalf of the applicant that this is a case where aggravated damages should be awarded. Although the respondents conduct was reprehensible, in our view it falls well short of the sort of conduct which would attract an award of aggravated damages."

[11]The two grounds intertwine, as I have indicated, and the factors which, in our view, are important to bear in mind are as follows:(1) that in this case, almost above all others, namely, the question of the calculation of compensation payable for injury to feelings, the view of the Tribunal who see and hear the witnesses must be paramount, particularly where they see and hear them on two separate occasions – one dedicated towards findings on liability and the second specifically dedicated towards assessment of compensation in the light of their findings. It is inappropriate for an appellate tribunal to substitute its own views or, indeed, to seek to enquire too pryingly into the thought processes of a very experienced tribunal in whom that duty is vested.

(2) One must have regard, in the light of recent guidance of the Courts and as a matter of common-sense, by way of comparison, not only to other tribunal cases in which decisions are made, bearing always of course in mind that the facts of any particular application are special and one can only look at such other cases for guidance, but also the quantum of compensation by way of damages for personal injuries in the High Court.

(3) Aggravated damages are not intended to be penal. Exemplary damages may in certain circumstances be appropriate to be visited on conduct which a Court wishes to mark with punishment, but that does not apply in this case, or indeed, in any case in these Tribunals. Aggravated damages are intended to visit, upon a party who has particularly misconducted himself, herself or itself, additional compensation for the victim of that conduct, but are intended to be compensatory not penal. It must of course reflect the conduct in question, but if the conduct in question is neither particularly bad on the one hand, or on the other hand the cause of additional stress or distress on the other, then it is unlikely to qualify as a candidate for adding aggravated damages to compensation otherwise properly assessed for injury to feelings. The Tribunal here, having heard the evidence, concluded that the conduct, although reprehensible, fell well short of the sort of conduct which would attract an award of aggravated damages and further concluded that it could assess the damages or compensation for injury to feelings suffered by this Appellant on ordinary principles, without need for recourse to any question of aggravated damages, particularly because, although the Appellant was clearly distressed, no medical condition was precipitated by the conduct in question. It goes without saying that there was also of course no evidence here of any physical abuse, as sometimes occurs. In those circumstances, we are entirely satisfied that there is no ground whatever to challenge the finding of the Tribunal, either as to the quantum of compensation or as to the non-applicability of aggravated damages.

[12]I turn to the question of the financial aspect of the claim, which falls into two parts and I deal shortly with what one might call the 'arithmetical' part first.

[13]So far as that is concerned, the Appellant submits, having done the figures, that in the calculations which were carried out, there has been no account taken of the fact that £437.62, which formed part of the £1,495, for which credit was given by the Tribunal as having already been paid, in fact related to the first two weeks of June prior to 16th June, when the Appellant had in fact been working and was entitled to pay in any event. How this came about was that the figure of £1,495, credit for which is given in paragraph 11 of the decision, was taken from adding together sums which had been paid by the Respondents in June and July, and the June figure arose out of a letter of 30th July, written by the Respondents, in which it informed those then advising the Appellant that they had paid the Appellant the sum of £950.78 at the end of June and "this includes maternity pay from 16th June" . What is clear to us is that that figure of £950.78 was in fact the ordinary monthly pay packet of the Appellant, and that what the Respondents were pointing out, on their own case, was that in respect of the period after 16th June they sought to claim that that sum should be taken as maternity pay. But by implication, they were thereby accepting that the sums paid before 16th June were the ordinary wage packet. That was lost sight of, it appears clear to us, when no credit was given for the sum of £437.62 in the calculations before the Tribunal. We ascribe no blame for that, which was no doubt done as a rush at the time of the Tribunal, although we do feel it strange that it has not been accepted subsequently as having been a mistake, because the position seems to be entirely clear to us

[14]I now turn to the interesting point that arises in this appeal out of the question of statutory maternity benefit. The Tribunal's conclusion in paragraph 9 of the remedies decision was as follows:

"9. Turning now to the issue of compensation for loss of income. We take into account that the restaurant where the applicant had been employed prior to her dismissal effectively closed for business at the beginning of August 1998 when all the remaining staff were dismissed, apart from an assistant chef who continued to remain in employment for a further couple of weeks to provide catering services for the respondents' own staff. We also take into account that no evidence has been produced to demonstrate that any of the other staff employed by the respondents were engaged by the current owners of the restaurant which apparently re-opened for business towards the end of 1998. Nor was any evidence produced to demonstrate that the staff had successfully claimed or received any compensation for unfair dismissal. On that basis we therefore conclude that had the applicant not been pregnant – or not been dismissed in June 1998 – she would also have been made redundant in August 1998. However we conclude that on the balance of probabilities the applicant would have been allowed to undertake until 15 August 1998 the duties which the assistant chef was given during that two week period since otherwise it is likely that the respondents would have had to pay the applicant statutory maternity pay during that same period in addition to wages to the assistant chef."

On that basis the Tribunal concluded that she would have remained in employment until 15th August 1998

[15]In calculating the amount of lost income to which the appellant was entitled, as I have already indicated, credit was given for the sum of £1,495, which was paid to her, and this was said to have been paid, at least in part, by way of statutory maternity benefit, and that sum was deducted from the amount she would otherwise have received in order to arrive at the net figure ordered to be paid of £765.

[16]The submission on appeal by Mr Marriott is that this was an error in relation to the calculation. He submits that what ought to have been done is to have concluded that she should be paid her wages up to the date when the Tribunal concluded that she would have received them, namely 15th August, but that she should then have her statutory maternity benefit in addition to that sum. The basis upon which he so submitted was not entirely clear, either from his Notice of Appeal or from his original submissions, but it developed in the course of argument so that it became that which I am about to summarise. He pointed out that the entitlement to statutory maternity pay arises under section 164 of the Social Security Contributions and Benefits Act 1992 , that provides:

"(1) Where a woman who is or has been an employee satisfies the conditions set out in this section, she shall be entitled, in accordance with the following provisions of this Part of this Act, to payment to be known as "statutory maternity pay". (2) The conditions mentioned in subsection (1) above are- (a) that she had been in employed earner's employment with an employer for a continuous period of at least 26 weeks ending with the week immediately preceding the 14th week before the expected week of confinement but has ceased to work for him, wholly or partly because of pregnancy or confinement."

That means, submits Mr Marriott, that provided that the Appellant had not been dismissed in June she would have been able to take her statutory maternity benefit after 15th August, the date when, the Tribunal concluded, she would have been caused to continue to work until the closedown of the restaurant.

[17]Mr Marriott has a little difficulty, it seems to us, in establishing that proposition, not as a matter of fairness but as a matter of law; because, on the face of it, it does not arise if the case is that the employment of the Appellant would have ended on 15th August, and maternity benefit would thus, on his case, have not arisen prior to the termination of the contract of employment, and yet the Appellant would not qualify for such benefit unless she is still in employment at the commencement of the maternity benefit period. Indeed, the course that the Tribunal suggested as being the one the Respondents would have taken, in paragraph 9, suggests that it too would have been of the view that the reason why it was concluding that the Respondents would have kept the Appellant in employment until 15th August 1998 would have been in order to save themselves the cost of maternity pay, by using the services of the Appellant, and thus dispensing with the need for the assistant chef whom they did in fact retain.

[18]We conclude that the Tribunal was not right in relation to its reasoning, albeit that it has made the finding, which is not challenged, that she would have remained in employment until 15th August, which we use as the basis for our conclusion.

[19]Our view of the law is this. That assuming employment until 15th August, which the Tribunal has postulated, the Respondents would not have been able then unilaterally to terminate the contract, with the effect of foreclosing the right of the Appellant to maternity benefit; quite apart from the fact that it seems to us, as a matter of public policy, that it should not be encouraged that an employer close down a business, or terminate a contract, in order to avoid an obligation to maternity benefit - indeed, such employer would hardly be doing this for any economic motive of his own, because, as we understand it, any monies he paid out by way of statutory maternity benefit would be recoverable in any event from the Government. But, irrespective of public policy, it appears to us that it is not right as a matter of contractual construction, nor is it the likely outcome of the retention of the Appellant until 15th August as the Tribunal postulated. It is clear from Gunton v London Borough of Richmond

[1980] ICR 755

CA that it is not the law in relation to contracts of employment, any more than it is the law in relation to any other contract, that one party can unilaterally terminate; i.e. an employer, in this case, cannot unilaterally terminate a contract. It takes two parties to terminate, unless there is of course an express clause that which one side or the other can take an advantage. If, in this case, the employer had sought to terminate the contract by giving notice, which we understand to be one week, then we have no doubt at all but that after receiving that one week's notice the Appellant, in this case, would not have waited for the expiry of the one week's notice, but would have immediately gone off on her maternity leave, thus qualifying for the payment under the Act. Alternatively, if the employer had not given one week's notice, but had sought unilaterally to terminate by summarily dismissing without giving any notice at all, on the basis of the law as set out in Gunton , the Appellant would have been entitled not to accept the repudiation, but to insist on working out her notice; this might involve simply notionally coming to the front door of the premises and offering herself as available for work, but it would not be very difficult for her to keep the contract alive, at least for a few hours, sufficient for her to be able to say that she was then ceasing work on grounds of pregnancy, having kept the contract alive for even a scintilla of time, sufficient enough to qualify herself for maternity benefit while the contract of employment still subsisted. In either, therefore, of those two situations, either a wrongful dismissal unaccepted by the employee, or a notice period during which it would be concluded that the appellant would have herself ceased work still employed, then on the scenario postulated by the Tribunal of the termination of the business on 15th August, this Appellant, would, we are satisfied, have qualified for maternity pay. In those circumstances, as a result of the unfair dismissal, she has lost not only the salary which the tribunal she would have received until 15th August, but, in addition, the statutory maternity benefit.

[20]The calculations have been done, and subject to the figure of £437.62 being added on top in the light of our earlier findings, the total is agreed at the figure of £1,763.04. Thus adding those two sums together, of £1,763.04 and £437.62, the total sum for which the Respondents are liable to the Appellant is £ 2,200.66, instead of £765 concluded by the Employment Tribunal, together with interest at 8%, which sum can no doubt be agreed.